The Swiss National Bank (SNB) has announced another cut to its key interest rate, lowering it from 1.5 percent to 1.25 percent. This move comes as the SNB revises its inflation projections for the coming years.
The SNB now expects inflation to be 1.3 percent in 2024, 1.1 percent in 2025, and 1 percent in 2026, even after the impact of the latest rate reduction. According to the central bank, underlying inflationary pressure has fallen further compared to the previous quarter.
By lowering the key rate, the SNB says it is able to maintain appropriate monetary conditions. This marks the second interest rate cut by the SNB this cycle, following the surprise decision in March to lower the rate from -0.75 percent to 1.75 percent in a series of five steps before holding it steady twice.
The SNB has stated that it will continue to closely monitor inflation developments and adjust its monetary policy “if necessary” to ensure price stability in the medium term. The central bank also reiterated its readiness to intervene in the foreign exchange market if required.
The announcement led to a rally in the US dollar against the Swiss franc, as the rate cut aligns with a broader trend of easing monetary policy. This month, the European Central Bank made its first rate cut of the current cycle, and market expectations point to the US Federal Reserve potentially trimming borrowing costs as soon as September.
For more economy news, click here.
